How Modern Homesteaders Can Make Money in the LiveStock Market

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How Modern Homesteaders Can Make Money in the Livestock Market

Written By: Tim Young, MOTHER EARTH NEWS Blogger

Did you know that, as a homesteader, you can make a great living in the stock market?

No, I am not talking about the New York Stock Exchange big board. I’m talking about the big-time live(stock) market. For most homesteaders this means cows, but it could mean bison, water buffalo, or large flocks of sheep. I will put pigs in there as well.

It goes without saying that you will need adequate pasture land to accommodate these voracious grazers, and that there are many benefits to raising them.

For example, if you purchase a young bull for $1,000 or so and five ready-to-breed heifers for the same price each, your $6,000 investment will likely produce five calves that will be fed for free (by their mothers and your pastures) each year for 12 to 15 years. You’ll also likely incur mineral expenses, but that’s nominal.

What will you do with these calves?

Perhaps you will sell them as stockers when they are weaned, or perhaps you will raise and market grass-fed beef.

If you were to raise the calves as grassfed beef, as I have done for many years, it is likely that each calf would become worth approximately $2,200 for you (net) in about 2 years. This assumes selling to consumers in urban markets. You can earn more or less profit depending on whether you sell individual retail cuts or market the beef as whole, halves or quarters.

Often the values are even higher than this and prices have been rising steadily over the past few years. That’s in your favor, but keep in mind that there is a ramp-up period of a couple of years before you realize any income, since it will take roughly 24 to 28 months to “finish” the cows. For that reason, some people view this model as an attractive homestead retirement strategy.

Once your “beeves” are ready for market beginning in Year 3, those five heifers (now cows) will be throwing off about $11,000 per year in gross profit ($2,200 per calf times five per year). If they do this for 12 years, then your initial investment of $8,500 for the bull and heifers will return a gross profit of $132,000.

Again, that’s only with one bull and five cows. If you have the land, you can multiply the herd size to fit your resources. Try safely getting those returns in the financial stock market.

Safely Make Money Farming with Livestock

The nice thing about this financial model is that it’s quite safe. Even if you lack the skills or time to market the product as beef, you can always sell to private buyers or at sale barns. Unlike with pieces of paper, such as worthless stocks (remember Enron?), I’ve never heard of anyone having a total loss with livestock.

Staying with this scenario and assuming each cow needs one acre of grazing land, you will need approximately 16 acres of pasture. This is for, A) the initial bull and five cows (6), B) the five calves born the first year that will take two years to grow (5), and C) the five calves born the second year (5).

After the second year, the five grown calves will be sold or processed, clearing the way for the five new calves born the third year, keeping the pasture demand static at 16 acres.

Of course, generating these returns requires that you purchase land for the animals. While the chart below shows the national average value of pastureland to be $1,200 per acre, good luck finding that in most areas.

In my neck of the woods, pastureland goes for $3,000 to $4,500 per acre, which is probably a better average to work with for most new homesteaders.

So, the 16 acres of land necessary for grazing will cost anywhere from $48,000 to $72,000 (not to mention paying modest annual taxes on the land), which takes a big “capital” bite out of the gross profit.

I emphasize the word “capital,” because the land-acquisition cost does not reduce your profit since, if you desired, you could sell the land at the end of the 12 years, likely get back at least what you paid for it and still have earned the $132,000. Plus, you would still have a dozen or so cows left over.

However, purchasing land ties up your capital for a long time, which is why you are entitled to the returns you can generate through certain farming enterprises. The returns go along with the risk and loss of capital.

Do You Have to Own Land to Raise Livestock?

No, you don’t, and some farmers follow Missouri farmer Greg Judy’s advice in his book No-Risk Ranching.

Today, Judy runs a grazing operation of over 1,400 acres of leased land over 11 farms. He and his wife went from near bankruptcy in 1999 to paying off a 200-acre farm within 3 years using his custom grazing model.

Using the above example of starting modestly with one bull and five heifers, you could consider leasing pasture land adjacent or local to you for perhaps $30 per acre, per year. Your annual rent would be $480 for 16 acres, and you would have no income from the grassfed beef operation to offset this for the first 2 years. However, after this you would generate $11,000 per year in income — far more than you would need to cover the expenses.

In this model, however, you would need to lease land that had good water (which will cost you more) or incur the cost of drilling a well. You would also have to fence it, as Greg describes in his book, but you would tie up far less capital. Perhaps you can even be debt free!

You may incur other minor expenses such as hay when grass is not growing, vet bills if you plan to use vets, and, of course, taxes on the land you own, but the income will drastically exceed the expenses as long as you market the product successfully.

I caution you to avoid exotic animals unless economic times are very good or are likely to be. In poor economic times, people want and need basic foodstuffs and materials, and your attempt to market grass-fed zebra may prove more challenging than you expect.

Stick what people want and know, unless you’re a highly-skilled marketer. Stick with beef.

You can do similar calculations to scale this up or down, or with other species such as pigs, bison, and so on.

The point is this: Putting the animals to work allows you to generate a stream of future income, improve your soil, and create wealth. The wealth is held not necessarily in fiat currency but in the value of your fertile soil and livestock.

Leave a Comment

2 Comments

We have approximately 25 acres of pasture and 14 acres of wooded area in north west Tn, that aren’t being used. We would love to rent that land to a cattleman to put cows or bison on. But how do we get a farmer interested to rent?

We suggest running an ad in your local paper. Another easy way to drum up interest would be to advertise on a community board at a local farm store. You may end up with unqualified interests, so have a plan on how you would like to vet your potential tenants.

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